“So far as I am able to judge, nothing has been left undone, either by man or nature, to make India the most extraordinary country that the sun visits on his rounds. Nothing seems to have been forgotten, nothing overlooked.” –Mark Twain, Following the Equator.

Electricity theft in India. (Photo courtesy: Hindu Business Line)

As an Indian and an enthusiast of the energy sector, I have always been fascinated by the Indian power industry. The country’s rapidly increasing population, decreasing fossil fuel reserves, and need for alternative energy sources make the Indian power sector an interesting case to examine. The seventh largest and second most populous country in the world, India has long been considered a country of unrealized potential. Currently, several factors, some of which are not straightforward, hinder the progress of the Indian power sector. I would like to take few minutes and summarize some of the many factors that come to my mind. In the first part of this blog I will discuss some physical and technical challenges facing the Indian power sector, while in the second part I will identify certain political challenges and the way forward.

Population explosion

A burgeoning population has created several problems in a country riddled with poor infrastructure and dependent on a primarily agro-based economy. The rate of increase in electricity generation is outpaced by population growth; therefore, it is difficult to meet growing demand.  While India ranks sixth in the world in terms of overall electricity production and consumption, its population of 1.2 billion means that per capita levels of electricity consumption remain low at just over 500 kWh per person per year, compared to more than 2,600 kWh in China and nearly 12,000 kWh in the United States.

Quality and quantity of coal

India’s coal reserves, which are of relatively low quality due to high ash content rates ranging from 30 to 45 percent, are decreasing. Coal shortages present a major challenge to the industry, and India is increasingly turning to imports to meet its coal needs. It is difficult to extract quality energy from such coal without compromising environmental factors. Compared to the average emissions from coal-fired, oil-fired and natural gas-fired thermal power plants in European Union (EU-27) countries, India’s thermal power plants emit 50 to 120 percent more CO2 per kWh produced. The carbon dioxide emitted as a product of coal combustion is currently responsible for over 60 percent of the enhanced greenhouse effect in India. Local impacts of coal power are also being felt in the country; an entire village, Jharia in Jharkand state, had to be relocated because of the deleterious effects of an underground coal fire that has been burning for decades.

Transmission and Distribution challenges

Transmission losses are one of the greatest concerns in India’s energy sector today. Losses due to technical issues are compounded by the increase in electricity theft, which causes financial loss for many utilities and leads to higher costs for power consumers. The loss of revenues due to electricity theft from illegal connections, unbilled consumption, and non-payment is difficult to quantify. The Electricity Act of 2003 has placed special emphasis on policies and monetary penalties designed to stop power theft. Although that legislation was a first step, several other measures must be taken to prevent power theft, such as wider usage of smart meters and two-way communicating demand management softwares. A very interesting study has been done on transmission and distribution (T&D) losses and theft for the state of Uttar Pradesh by researchers from University of California Los Angeles, University of Michigan and Princeton University. The results of this study are shown in the table below.

 Another very important challenge faced by the country is grid extension and rural electrification.  Approximately 35 percent of India’s population is still without electricity.  The country’s Rural Electrification Policy established targets for 100 percent residential electrification by 2012 (which has not been achieved).  Such aggressive goals raise questions as to whether the grid is capable of handling such increased transmission and if the country has sufficient resources for such a sudden increase in generation or import of energy.

Technical challenges

The technical challenges of the electricity sector in India include low efficiencies of thermal power plants, continued reliance on coal plants, and inadequate transmission and distribution networks. Most of the coal plants in India are outdated and still do not have technologies like Selective Catalytic Reduction (SCR) for emission control. Although the efficiency of coal-based power plants in India has improved in recent years, it still remains low in absolute terms. The average net efficiency of India’s entire fleet of coal power plants is only 29 percent, although the country’s large 500 megawatt units operate with a better net efficiency of about 33 percent. Many of the thermal power plants are not operating to their full potential. Large numbers of thermal units are old and have outlived their normal lifespan. India’s Central Electricity Authority (CEA) has recognized renovation and modernization of existing plants as an important step towards efficiency improvement and cost reduction in the power sector.

The second half of this blog will throw some light on political and policy aspects of the country, as well as several international relations issues that hamper India’s energy development.

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India, Indian power sector, technical challenges